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2015
- handle: 10670/1.41fa2y
- halshs: halshs-01242505
- doi: 10.1111/sjoe.12106
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info:eu-repo/semantics/altIdentifier/doi/10.1111/sjoe.12106
info:eu-repo/semantics/OpenAccess
Mots-clés
efficiency Search and matching heterogeneous workers applicant ranking public policies D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant WorkersSujets proches
Personnel Workers Laborers Wages--Minimum wage Minimum wages Earnings Wage rates Wage-fund Departmental salaries Remuneration Pay Salaries Compensation Working class--WagesCiter ce document
Frédéric Gavrel, « Participation, Recruitment Selection, and the Minimum Wage », HAL-SHS : économie et finance, ID : 10.1111/sjoe.12106
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Résumé
In this paper, we re‐examine the efficiency of participation with heterogeneous workers in a search‐matching model with bargained wages and free entry. Assuming that firms hire their best applicants, we show that participation is always too low. The reason for this is a hold‐up phenomenon: to be active, a worker must pay the entire search cost whereas part of the gain from this investment goes to the firm. As a consequence, introducing a (small) minimum wage raises participation, job creation, and employment. Therefore, net aggregate income of the economy is increased.